High turnover is a ground for excluding companies as not comparable with a company that has low turnover. Company having huge intangible assets could not be considered for inclusion in list of comparables to software development services provider. Negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. (AY. 2013-14)
Aptean India (P.) Ltd. v. DCIT (2022) 192 ITD 397 / 93 ITR 388 (Bang.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-High Turnover-Huge intangible addition-Negative working capital-High turnover is a ground for excluding companies as not comparable with a company that has low turnover-Huge intangible assets-Could not be considered for inclusion in list of comparables to software development services provider.-Negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis.